Splunk Inc (NASDAQ:SPLK) stock fell 0.17% (As on March 2, 11:22:24 AM UTC-4, Source: Google Finance) after the company gave a first-quarter and full-year outlook that came in far below Wall Street’s targets. In Q4, the company grew total ARR by 80% year-over-year to $3.674 billion. Cloud ARR grew 33% to $1.778 billion. During Q4, the company continued to see cloud migrations and expansions impacted by the macro environment, as well as increased deal scrutiny, which is factored into the guidance for the current year. In Q4, the company generated $269 million of free cash flow. Fiscal 2023 free cash flow as a percentage of ARR was 12%, an increase of more than 800 basis points year-over-year.

SPLK in the fourth quarter of FY 23 has reported the adjusted earnings per share of $2.04, beating the analysts’ estimates for the adjusted earnings per share of $1.14. The company had reported the adjusted revenue growth of 39 percent to $1.25 billion in the fourth quarter of FY 23, beating the analysts’ estimates for revenue of $1.08 billion. The delayed cloud migrations helped boost term contract volume. The term deals also had a longer average duration than the company had anticipated. Total gross margin increased by more than 400 basis points year-over-year and Q4 non-GAAP cloud gross margin increased by nearly 700 basis points to 73.4% on a year-over-year basis. Q4 non-GAAP opex increased by only 2% year-over-year.  In Q4, the company  generated $381 million of non-GAAP net income.

For the first quarter, it expects revenue of between $710 million and $725 million, quite a bit below the analyst consensus estimate of $807.2 million. For the full year, it’s targeting sales of $3.85 billion to $3.9 billion, below Wall Street’s forecast of $4.02 billion.

Based on the current market environment, the company expects to exit fiscal ’24 with total ARR between $4.125 billion and $4.175 billion, implying net new ARR of approximately $450 million to $500 million. The company expects the cloud mix of software bookings will range between 55% and 65% in fiscal ’24. In fiscal ’24, the company expects to increase non-GAAP opex by approximately 7% year-over-year to fund investments that will help deliver growth in fiscal ’25 and beyond. Fiscal ’24 non-GAAP operating margin is expected to be between 16.5% and 17.5%. The company expects to generate free cash flow between $775 million and $795 million.